Advertisement

Radio stations maybe forced to shut down unless they get some relief

Radio stations: With advertising the revenues that under the pressure, as radio companies might be forced to shut down the stations unless they get some relief in the form of a waiver on the license fees, Prasar Bharati’s tower rentals, and also charges on WPC (i.e. wireless planning and coordination).

Advertising
Advertising

In around the April to June quarter, the advertisement revenues most of which come from the metros and so also big cities that stood at a meager around 10-12% of the last year’s levels as well. Inventories have not been utilized to the extent of even 10%, according to Nisha Narayanan, COO at Red FM and Magic FM.

Advertisement

Prashant Panday, the MD & the CEO at ENIL (i.e. Entertainment Network India), told that the firm is “the definitely evaluating several cities that appear to be unviable but a lot would depend on what relief authorities provide to broadcasters”.

Radio City that operates around 39 stations might consider shutting down some of them if the revenues continue to remain strained and also there is no help from the govt, as told CEO Ashit Kukian as well.

Advertisement

ENIL runs around 73 Radio Mirchi stations across around 63 cities and also slipped into the red in the Q4FY20 and also the company has been posted net losses of around Rs 2.15 crore, which reversing net profits of around Rs 19.80 crore reported a year ago as well. Music Broadcast that runs the Radio City recorded net profits of around Rs 8.91 crore during the quarter, lower than around Rs 18.35 crore posted in the Q4FY19. Net profits for DB Corp’s radio business (MyFM) has declined to around Rs 3.5 crore in the January to March quarter from around Rs 6.3 crore in the Q4FY19.

With big events such as IPL under a cloud and so also the consumer sentiment tepid, advertisers may hold back on spends as well. The cost of running around 68 stations can be challenging and also the daily expenses that become a “major struggle”, as told Red FM’s Narayanan as well. “We will continue to hold on as long as we can. We are hopeful some help from the government will come our way,” she added as well.

Literally, operating costs for a small station like Bharuch could be anywhere between around Rs 60-75 lakh annually whereas for a medium-sized station like Kolhapur, it can run into around Rs 4 crore (that depending on the number of people employed as well). The expenses on running a station in a metro would be the range of around Rs 10-40 crore, explained Panday.

Jehil Thakkar, the partner at Deloitte, told national brands contributing a significant portion of ad revenues that have cut back on spending, and also there has been a considerable drop in ad rates as well. The rest of the pie comprising that local businesses have been lost since most of them have halted operations also.

Also Read: Biocon shares jumped almost 5 percent in morning trade on BSE on July 14